Short sale
A sale in which the lender agrees to accept less than the mortgage balance because the home is worth less than is owed, letting a struggling owner avoid foreclosure.
What does short sale mean?
In a short sale, an owner who owes more than the home is worth sells it with the lender's permission for less than the loan balance, and the lender writes off the shortfall. It is slower and more complex than a normal sale because the lender must approve, but it damages credit less than a foreclosure and releases the owner from an underwater loan. It is a last resort when payments are no longer sustainable.
Frequently asked
How does a short sale affect your credit?
A short sale hurts your credit, but generally less than a foreclosure, and the waiting period to buy again is usually shorter. It also releases you from an underwater loan, which is why it is often the better of two difficult options.
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